Mandating a merger of group medical managed care and workers' compensation in a 24-hour system might cost billions more than it saves, according to a study by a California insurer-funded group.
Applying managed-care tech-Workers' comp
niques-including the use of HMOs and PPOs as well as deductibles and copayments-in workers' compensation in California could save up to $1 billion annually, according to the San Francisco-based California Workers' Compensation Institute.
But earlier research by the CWCI showed that mandatory merged medical benefits for all California employees and their dependents-which is the first step in 24-hour coverage-would add $8 billion to $16.9 billion a year to employers' benefit costs.
That is because such a mandate would extend coverage to many employees not now covered by group medical insurance.
The CWCI studies, based on a healthcare database created by William M. Mercer, are the first to quantify the potential costs and savings of the much-touted 24-hour coverage system. Under a mandatory, fully integrated 24-hour system, group medical and workers' compensation programs would be merged, and all employees would be treated by one managed-care plan whether or not their illness or injury was work-related.
"To be politically feasible," the CWCI report said, such a system needs to point to "substantially greater savings than those identified thus far."
The CWCI studies deal only with the cost and savings resulting from mandating merged coverage. Less-integrated voluntary programs that coordinate group health and workers' compensation benefits are operating in California and in other states.
The recent CWCI study identifying $1 billion in annual savings assumes reduced utilization levels by injured workers. And the mandated deductibles and copayments would result in injured workers paying $250 million to $292 million per year in medical costs.
The study showed HMOs offer the greatest potential savings over fee-for-service and point-of-service plans and PPOs.
"Treating work injuries in a group medical HMO would shift 10% of employer costs to employees, compared with 11% if the merged plan was a PPO, 12% if it was a point-of-service plan and 16% if it was a fee-for-service plan," the CWCI said.